Mango Markets Exploiter Tried to Exploit Aave Loophole: Here's How the Attempt Failed

A governance proposal is now live on Aave that will prevent another price manipulation on the platform.

Mango Markets Exploiter Tried to Exploit Aave Loophole: Here's How the Attempt Failed

Photo Credit: Unsplash/ RODNAE Productions

After Eisenberg's attempt, Aave remains left with $1.6 million (roughly Rs. 13 crore) of bad debt

Highlights
  • In the end, all of Eisenberg’s CRV loan was liquidated
  • Eisenberg outlined a plan to exploit Aave in October
  • In the end, all of Eisenberg’s CRV loan was liquidated

Mango Market's exploiter Avraham Eisenberg's attempt to replicate his "highly profitable trading strategy" on decentralised finance (DeFi) protocol Aave has failed, resulting in the loss of millions. As per on-chain analytics firm Lookonchain, an address associated with Eisenberg, transferred $40 million (roughly Rs. 325 crore) worth USD Coin (USDC) into Aave to borrow Curve (CRV) token with the intention of shorting. This resulted in CRV price tanking by roughly 26 percent to $0.464 (roughly Rs. 37.34) from $0.625 (roughly Rs. 51.14) over the past week.

That said, the move didn't go entirely as planned as the community rallied behind CRV, buying the DeFi token and causing its value to spike 46 percent in the last 24 hours to as high as $0.71 (roughly Rs. 57.63).

Blockchain analytics firm Arkham Intelligence tweeted Eisenberg might be baiting people to believe that he was shorting CRV to cause the liquidation of Michael Egorov, founder of the DeFi network.

According to Arkham Intelligence, Eisenberg's real target was AAVE's vulnerable looping system and his borrowings could leave the DeFi network with severe bad debt. The blockchain analytics firm added, "To liquidate Avi's position, AAVE liquidators will have no way to buy back all the CRV he borrowed. On-chain, there is no liquidity to pay back more than ~20 percent of the position. AAVE will have to sell significant amounts of tokens from the safety module to cover this loss."

In October, Eisenberg explained that it was possible to manipulate Aave lending policies to borrow massively, dump it, and leave Aave with bad debt.

Following the failure of the short strategy, Aave said the liquidation process of its CRV pool was successful and went as planned. But it noted that the position was not fully covered as 2.6 million CRV ($1.6 million or roughly Rs. 13 crore) remained, representing less than 0.1 percent of the positions on the protocol.

A new governance proposal is now live on Aave that will prevent another price manipulation on the platform.

Meanwhile, the Aave community pointed out that the developers could have done something to prevent this scenario as they had received several warnings about the possibility previously.


What are the best wireless and wired earphones you can buy in India? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.
Affiliate links may be automatically generated - see our ethics statement for details.
Comments

For the latest tech news and reviews, follow Gadgets 360 on Twitter, Facebook, and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel.

Shomik Sen Bhattacharjee
Shomik is a senior sub-editor at Gadgets 360. As someone who's screened the consumer tech space for the past four years, he's now shifted focus to the crypto-verse. When not converting currency values in his head, you may find him in an intense five-a-side football match or grinding out the newest Destiny 2 weekly challenge on his Xbox. You can reach him for tips or queries at ShomikB@ndtv.com. More
Sam Bankman-Fried Says He's 'Deeply Sorry' in Letter to Former FTX Employees
Featured video of the day
Is Flexibility a Good Enough Reason to Buy The Lenovo Yoga AIO 7?
Share on Facebook Tweet Snapchat Share Reddit Comment google-newsGoogle News

Advertisement

Follow Us

Advertisement

© Copyright Red Pixels Ventures Limited 2022. All rights reserved.